No breakthrough on student-loan rates

Senate leadership huddled with top Obama administration officials Tuesday night on the issue of doubled student loan rates, but no breakthrough was apparent after the 75-minute meeting.

White House Chief of Staff Denis McDonough and Secretary of Education Arne Duncan came to Senate Majority Leader Harry Reid’s office to meet with Democrats on how to move forward on an issue that has divided the caucus. Most Democrats prefer a one-year extension of subsidized loan rates at 3.4 percent, a proposal set to get a vote at noon Wednesday and to almost certainly fail.

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The caucus does not appear to be moving off that position after the rates for subsidized federal loans doubled to 6.8 percent on July 1.

“We’re focused on seeing what we can do tomorrow, because we want to keep the interest rates low for students. If the Republicans won’t come to the table on that, we’ll have to look at plan B,” Sen. Patty Murray (D-Wash.) told POLITICO after the meeting.

“We talked about a lot of options. The No. 1 choice is to pass the vote tomorrow,” added Sen. Debbie Stabenow.

Duncan sounded notes of progress. Earlier Tuesday, divisions among Democrats deepened after Reid panned a bipartisan proposal in the Senate that would peg student loan rates to Treasury notes but lacks a cap on rates that Reid prefers. Both Duncan and McDonough declined to talk specifics of the Democratic game plan; neither would Majority Whip Dick Durbin (D-Ill.), who declined comment after the meeting.

“It was a good conversation, people are working really hard,” Duncan said in a brief interview. “People are really committed to finding a way to get this done.”

Some of Reid’s Democratic caucus is supporting a fix pegged to Treasury notes, including Sens. Joe Manchin of West Virginia, Tom Carper of Delaware and Maine independent Angus King. Sen. Richard Burr (R-N.C.) said that Joe Donnelly (D-Ind.) is also supporting the bill, which caps loan consolidations, but not individual rates.

Manchin and King pitched the bill to a “lively” Democratic lunch Tuesday, but the pitch did not sway Reid.

Without a cap, Reid said it would be better for the Senate to do nothing at all. Many Senate Democrats agree, coming to the floor in droves Tuesday to back his proposal. But not enough to move the one-year extension forward — it’s expected to fail on Wednesday.

“It has to be something that’s better than nothing. We do nothing, it goes to 6.8 percent. I don’t want to do something that exacerbates that,” Reid said after the lunches.

Republicans are expected to continue to unanimously oppose any temporary extension of loan rates. Sen. Lamar Alexander (R-Tenn.), the point man on the issue among Senate Republicans, appeared alongside Minority Leader Mitch McConnell to plead for a vote and support for their plan to permanently change rates.

“We have a chance to for a permanent solution,” Alexander said. “Why should we have a political one-year fix?”